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AUSTIN, TX-Drever Opportunity Fund LP has paid $17.75 million for The Village at Gracy Farms, a 308-unit luxury apartment community on 17 acres in Northwest Austin. Occupancy is at about 91%.

The $57,600-per-unit price is one of the lowest, if not the lowest, price per unit paid in Austin for a class A multifamily complex since the technology bubble burst. The seller, which local sources tell is Prudential Real Estate Investors, acquired the property 14 months ago for $82,800 per unit. The 30% discount for Drever is in response to a significant drop in vacancy and face rents combined with a jump in owner concessions to attract new tenants.

Paul Odland, president and CEO of Concierge Asset Management of Tiburon, Calif., sponsors of the Drever DOF Fund, describes the Austin apartment market as “on a slippery downslope,” a place where rents are falling, expenses increasing and some cash strapped owners are unable to maintain their properties and are deferring maintenance.

“I think we made a fair deal given what’s happening in the Austin market,” Odland tells “We think there’s still a lot of pain left and that prices will fall further, but we’re placing a bet that the world will become a better place and that the fundamentals will get better; the seller may be the one with the last laugh, but we hope not.”

The bulk of the acquisition price was funded with a $12.4-million Freddie Mac loan at 5.24% fixed rate for 30 years. The loan was sourced by Brant Smith, a director with Houston-based Holliday Fenoglio Fowler. Smith said Austin is a tough market to lend in right now because of the perceived overbuilding, lack of job growth and a strong dependency on technology; however, he said the financial strength of Maxwell Drever and his Concierge organization mitigated the market softness.

Dick Obenhaus, partner in the Austin office of The Apartment Group and the broker who represented the owner, says Drever was one of five potential buyers to make a bid for the property. He describes Gracy Farms as one of the last luxury apartment complexes to be built in Northwest Austin, and says there is no available land left for a new apartment development.

“Internally we wrestled hard on making the decision to buy because we feel Austin will see further price deterioration,” says Joe Gillespie, director of acquisitions for CAM. “However, we realized the property’s great location and fixable problems are value-adding opportunities we could capitalize on.”

Odland tells that the Drever Fund already has about 1,000 units in Austin and is looking to acquire another 2,000 units there in the next 12 to 24 months, but only if the price is right. “We’re looking at deals every week,” says Odland, “but it’s hard finding sellers who have realistic expectations of making a transaction happen.”

Greystar Management in Austin has been appointed property managers for the Village at Gracy Farms, which is located across from IBM’s main campus and near North Austin Medical Center and Austin Community College. Gracy Farms is the third Austin apartment complex acquired by a Drever fund. Last October, the 512-unit Limestone Ranch was acquired in North Austin near the Dell campus. Earlier, a Drever fund purchased the 102-unit Hamilton in South Austin.

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